Saeima approves fuel excise tax cut — 8 cents instead of promised 20
Latvia's parliament has given final approval to a temporary cut in fuel excise duty, expected to lower retail fuel prices by about 8 cents per liter — far less than the 20-cent reduction the prime minister had earlier promised.
The Saeima has given final-reading approval to amendments temporarily reducing excise duty on fuel. The change takes effect on October 1 and will remain in force until December 31 this year.
Under the approved amendments, the excise rate on diesel will drop from €396 to €330 per 1,000 liters, while the rate on gasoline will fall from €555 to €490 per 1,000 liters. The bill's authors note that if fuel retailers pass the full tax reduction on to consumers, diesel prices could fall by roughly 8 cents per liter.
Bigger promise, smaller result
Before the vote, Prime Minister Andris Kulbergs had announced on social media that the government was working on measures to bring fuel prices down as much as legally possible. At the time, he suggested the combined savings could reach up to 20 cents per liter, drawing on three measures: cutting excise duty (about 8 cents), scrapping fuel reserve maintenance costs (about 8 cents), and lifting biofuel additive requirements (about 4 cents). In the end, the Saeima advanced only the excise duty cut.
Budget impact
The excise reduction is expected to cost the state basic budget around €14.4 million in lost revenue. As a one-off offsetting measure, lawmakers plan to use surplus revenue from the sale of confiscated criminally obtained assets, since actual proceeds from such sales in 2026 exceed what was originally planned. Officials stress this fix applies only to 2026 and should not be treated as a long-term funding source.
The Finance Ministry does not object to the changes, noting they include an offsetting mechanism, but warns the tax cut will only ease fuel price pressure in the short term. If fuel prices remain elevated, next year's budget could face additional fiscal strain should the support measures need to be extended.
